How does the bad stock market affect my 401k?

Conceivably you have at least 30 years before you need the money in your 401k. The market is going to go through several up and down cycles in that time frame. Your 401k is pretty risky right now because you are still young, with a lot of time to invest. And because its more risky now your 401k is going to be pretty volatile. Dont worry about the volatility now. Just keep it balanced according to your risk profile and as you get older and closer to retirement you should gradually get more conservative with your 401k and it should become less volatile.